Deutsche Bank

Global Transaction Banking

Alternatives for Working Capital Financing

Break-Out Session – Deutsche Bank Advisory Day

Deutsche Bank AG is authorised under German Banking Law (competent authority: BaFin - Federal Financial
Supervisory Authority) and authorised and subject to limited regulation by the Financial Services Authority.
Details about the extent of our authorisation and regulation by the Financial Services Authority are available
from us on request.
 Deutsche Bank Advisory Day - 11 September 2014

Break-Out Session Current Industry Trends:

Alternatives for
Working Capital
Core Suppliers are increasingly gaining strategic importance
Financing Interdependencies for producers of goods and services
Presentation:
Bas Marteijn, Buyer / Seller relationships tend to have a global reach,
Head of Trade Finance
Globalisation widening the scope for arbitrage opportunities between
business partners

Increasing focus Many Corporates have recently launched company-wide

initiatives to improve Working Capital Management, start to
on Working Capital focus on the unused potential of Accounts Receivables and
Management (WCM) Account Payables

Accelerating trend away from traditional trade finance

Open account instruments towards open account settlement reduces
payments transaction cost but increases counterparty risk for
corporates

Deutsche Bank 2
Global Transaction Banking
 Deutsche Bank Advisory Day - 11 September 2014

Break-Out Session Net Fixed Assets

Alternatives for
Working Capital Financial Liabilities
Financing
Fixed Assets
Other Intangible Fixed
Presentation: Assets
Bas Marteijn,
Head of Trade Finance
EBIT Current Assets Inventories

Operating Sum of Assets

ROCE Trade Accounts
Receivable
Trade Accounts
Capital Payable
Employed Cash and Cash
Current Liabilities Equivalents
Current Bank
Loans

Other Current
Liabilities

Working Capital Components in focus of Supply Chain Finance

ROCE Return on Capital Employed

Deutsche Bank 3
Global Transaction Banking
 Deutsche Bank Advisory Day - 11 September 2014

Workflow of a Financial Supply Chain Solution

Break-Out Session Accounts receivable finance Accounts payable finance

Alternatives for
Working Capital
1. Delivery of goods/services 1. Delivery of goods/services
Financing & submission of invoice
& submission of invoice

Presentation:
Bas Marteijn, Buyer Supplier
Head of Trade Finance
2. Provides DB with 2. Check of invoice 3. Access to
invoice data asking and forwarding to accepted invoice
for discount platform and request for
payment

3. Check of invoice
by DB
4. Check of invoice
by DB

5. Payment of 6. Payment of
invoice invoice
at maturity 4. Payment of at maturity
date original buyers date 5. Payment of
suppliers

Deutsche Bank 4
Global Transaction Banking
 Deutsche Bank Advisory Day - 11 September 2014

Receivable Purchase
Break-Out Session
– Accounts Receivables Purchase is an optimal solution for corporates, who want to enhance their working capital management, reduce
Alternatives for concentration risk of buyers, increase liquidity generation or use margin arbitrage between buyer and seller rating and thereby enabling
Working Capital mutual business growth.
Financing – Deutsche Bank purchases trade receivables, originated out of commercial invoices after shipment, from our Client (seller) on a going
concern basis with limited or without recourse to the seller. 100% advance rate of receivables, discounted based on matching CoF + a
Presentation: margin. Tenor of the Accounts Receivables in general is maximized up to180 days.
Bas Marteijn,
– Deutsche Bank obtains the right of legal recourse against the buyer through an assignment of the underlying receivable by the seller in
Head of Trade Finance Deutsche Bank‘s favor. In case receivables are insured, insurance cover will also be assigned to Deutsche Bank.

– Depending on jurisdiction of the receivables, the credit approval for the buyer and the agreed conditions in the underlying contract the
assignment will be disclosed to the buyer and the buyer will directly pay to Deutsche Bank on due date. If not the seller acts as a
collecting agent for Deutsche Bank.

– Leverage Deutsche Bank international network: Account Receivable Purchase Program easily expandable across the globe!

– Advantages for the seller:

Receivables converted into cash upon shipment through optimized Working Capital Management.
Receivable Purchase is an additional source of funding without using own credit lines and providing transaction-related collateral.
Funding is matched to the seller’s sales made to approved buyer.
Ability to de-risk your trade receivables on approved buyers.
Improvement of balance sheet ratios and working capital.
Increased sales due to broader financing opportunities and a better negotiation position.
Recurring cost reduction due to decrease in bank debt.
Lower Capital employed, decreased interest and lower debt result in increased equity value and Return on Capital Employed.

Deutsche Bank 5
Global Transaction Banking
 Deutsche Bank Advisory Day - 11 September 2014

Confirmed Payables / Supplier Finance

Break-Out Session
– Payables Finance is an optimal solution for our corporate clients (buyers), who want to enhance their working capital management,
Alternatives for increase liquidity generation, improve trading partner relationships and thereby enable it business to grow.
Working Capital – Deutsche Bank provides financing to key suppliers of our Client, by using available credit lines on the Client.
Financing
– When the Client approves invoices, the confirmed payables will be sent to Deutsche Bank.
Presentation: – Deutsche Bank will provide the information of the confirmed payables to the supplier and the supplier may request Deutsche Bank to
Bas Marteijn, purchase the receivables.
Head of Trade Finance
– Deutsche Bank has legal recourse on the Client through an assignment of the underlying disclosed receivable by the supplier in Deutsche
Bank's favor.

– Deutsche Bank discounts the receivables of the supplier upfront and collects the repayment from the Client on due date. Maximum tenor
of 180 days.

Deutsche Bank 6
Global Transaction Banking
 Deutsche Bank Advisory Day - 11 September 2014

Advantages Confirmed Payables / Supplier Finance

Break-Out Session
– Benefits for the Buyer / the Client:
Alternatives for Improved negotiating position regarding purchase prices / terms of payment by offering attractive financing to the supplier.
Working Capital
Creation of additional liquidity due to longer payment terms and improvement of key indicators (WCM, EBIT, ROCE, interest
Financing
expenses); credit lines for Payables Finance shall not arise as bank loans in balance sheet.

Presentation: Closer relationship with strategically important suppliers, securing of supplier capacity and financing of common growth targets.
Bas Marteijn, Flexibility in choice of suppliers and program size.
Head of Trade Finance
Option to join our electronic platform at a later stage without changing the complete legal documentation.

– Benefits for the Seller:

Promotion of sales volume by extending payment terms.

Additional source of liquidity without utilizing own existing credit lines.

Positive effect on important indicators / figures because of expected true sale of receivables (equity ratio, DSO ...).
More favourable financing in comparison to current account financing or factoring and by using a positive gap in the risk rating of the
buyer.
Cost savings by replacement of credit insurance possible.
Elimination of debtor risk and avoidance of concentration risk.
Full flexibility by individual selection of invoices for discount and date of discount.
Accurate cash flow planning possible.

Deutsche Bank 7
Global Transaction Banking
Deutsche Bank
Global Transaction Banking

Optimizing funding strategy of a company –

tapping from different sources

Break-Out Session – Deutsche Bank Advisory Day

Deutsche Bank AG is authorised under German Banking Law (competent authority: BaFin - Federal Financial
Supervisory Authority) and authorised and subject to limited regulation by the Financial Services Authority.
Details about the extent of our authorisation and regulation by the Financial Services Authority are available
from us on request.
 Deutsche Bank Advisory Day - 11 September 2014

Overview of Alternative Funding Solutions

Break-Out Session
SME Companies Mid- / Large Cap Companies
Optimizing funding
strategy of a company Crowd Funding / Credit Unions Senior Debt
– tapping from different - Investeringsplein.nl -Private Debt Funds
sources - MILK crowdfunding -Institutional Investors
- NPEX (bonds)
Presentation:
Diederik Kolfschoten, Asset Based Financing Working Capital Solutions
Head of Structured - Borrowing Base / Factoring - Receivable Purchase
Finance - Lease - Asset-based Financing
- Supply Chain Solutions

Goernmental
GovernmentalProgrammes
Programs Debt Capital Markets
- BMKB / GO Private: SSD and USPP
- Finance for International Business Public: High Yield, Corporate Bonds

Subordinated Debt / Mezzanine Subordinated Debt / Mezzanine

- Mezzanine funds / informals -Mezzanine, 2nd Lien Debt
- Regional Development Companies -Unitranche

Equity Equity
-Private Equity Firms
- NPEX (shares) - IPO
- Regional Development - Convertible
Subordinated DebtCompanies

Deutsche Bank 9
Global Transaction Banking
 Deutsche Bank Advisory Day - 11 September 2014

Break-Out Session Setting the Scene for Alternative Funding Solutions

Almost 80% of corporate debt funding in the Netherlands is provided by banks.

Optimizing funding
strategy of a company
– tapping from different
sources Basel III / CRD IV requirements impose capital constraints on financial institutions.

Presentation:
Diederik Kolfschoten,
Head of Structured Quantitative Easing of the ECB/Fed has significantly lowered (short-term) funding costs and created an
Finance abundance of short-term liquidity.

Banks have tightened their lending standards, creating liquidity squeezes for selected sub-investment
grade companies, in particular in the SME segment.

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Global Transaction Banking
 Deutsche Bank Advisory Day - 11 September 2014

In the mean time.....

Margins have steadily Average margin by rating range Loan tenor evolution
dropped in recent years 600 80%
and are close to pre-crisis 70%
levels... 500
60%

400 50%
(bps)

40%
...whilst average tenors 300
have been extended... 30%
200
20%

100 10%
...and leverage multiples 0%

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014
0
have increased Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014
< 1 year 1 - 3 years
AAA/AA A BBB BB 3.1 - 5 years 5.1 - 9 years

Break-Out Session
EBITDA multiples in leveraged loan market Commentary
Optimizing funding
8x – Across EMEA, pricing has been falling dramatically as banks
strategy of a company
compete for business in a low volume environment
– tapping from different 6x 5.9x
5.2x 5.4x 5.3x – Since 2009 pricings on IG facilities have become increasingly
sources 5.1x
4.7x
4.1x 4.2x 4.4x 4.5x differentiated by country given the sovereign debt and macro
4x related fragmentations of European loan markets.
Presentation:
– Current primary loan market conditions are very strong, driven
Diederik Kolfschoten, 2x by (1) Investor fund inflows; (2) Lack of new issue supply
Head of Structured relative to demand; and (3) Less attractive secondary market
Finance 0x valuations.

2005 2006 2007 2008 2009 2010 2011 2012 2013 2Q14

First lien/EBITDA Second lien/EBITDA Other debt/EBITDA

Deutsche Bank 11
Global Transaction Banking
Deutsche Bank
Global Transaction Banking

Step 1 in alternative funding:

Operational Excellence

Break-Out Session – Deutsche Bank Advisory Day

Deutsche Bank AG is authorised under German Banking Law (competent authority: BaFin - Federal Financial
Supervisory Authority) and authorised and subject to limited regulation by the Financial Services Authority.
Details about the extent of our authorisation and regulation by the Financial Services Authority are available
from us on request.
 Deutsche Bank Advisory Day - 11 September 2014

Operational Excellence

Break-Out Session
Transparency of cash flows
Step 1 in alternative Mobilization of cash
funding: Operational Business Planning Optimization of liquidity Treasury Planning
Excellence

Presentation: I
Edwin Hartog, Head of Account/liquidity structure (Sepa 2.0)
Cash Management
Corporates Receivables Management
Regional /Global Platform
Local/ Regional /Global footprint
FX solutions

Improvement Working Capital

Decrease of Funding Need (25%)
Increase of Entreprise Value and Return on Capital Employed

II
Suppliers Structured Finance
Alternative Funding
Receivables

Deutsche Bank 13
Global Transaction Banking
 The Deutsche Bank advantage
Why choose us for Cash Management and Trade Finance?

 Stable business model between Transaction Banking / Retail Banking and

Investment Banking
Reliable partner for Financial Stability  Strong external rating (Moody’s A3, S&P A, Fitch A+)
sound advice and  Strong capital basis
 Long history of commercial banking
fresh ideas
providing global
market access  Market-leading provider of best-in-class working capital solutions through
thought leadership and innovative use of technology assets
combined with Innovative Solutions
 Structuring and problem solving culture
powerful execution and Expertise
 Influential driver of major industry initiatives
and excellent  Flexible and customized payments and collections services
service
 Leading FX bank globally (15.67% market share in 2014)
 World’s largest Euro clearing bank and #6 in USD clearing 1)
Global Leadership
 Fully scalable platform and infrastructure to process large volumes
in FX and Clearing
 Average daily payment processing in excess of EUR 1.1 trillion 2)
 EUR 73.9 billion3) Trade Finance book

 Global footprint with Cash Management and Trade Finance operations in

Global Network 47 countries and more than 190 locations
with a leading  “Follow the sun” global operating model
European Position  Full relationship, sales, service and technology teams across our global
presence with full knowledge of clearing and settlement systems

 Market differentiating, high quality Trade & Cash services and implementation
Commitment to channels for our clients
Deutsche Bank Advisory Day –
Service Excellence  Proprietary global network of local customer service teams
11 September 2014
 Easy to use client access channels

1) Source: ECB, based on EURO payments through 'Target 2' and 'EBA EURO1‘,clearing system, CHIPS (March 2014)
2) Peak volumes Source: GTB Finance as of March 2014 3) Source: GTB Finance as of March 2014

Deutsche Bank 14
Global Transaction Banking
 Deutsche Bank global footprint

Global Transaction Banking Europe

“We aspire to be the The Global Transaction Banking division Austria Greece Poland Turkey
of Deutsche Bank employs 4,627 people Belgium Hungary Portugal Ukraine
leading client-centric and has a presence in 46 countries, Channel Islands Ireland Russian Fed. United Kingdom
global universal serves customers in more than 190 Czech Republic Italy Spain
countries. France Luxembourg Sweden
bank” Germany Netherlands Switzerland

Asia Pacific

Australia
China
Hong Kong
Americas India
Indonesia
Argentina Japan
Brazil Malaysia
Cayman Islands Philippines
Chile Singapore
Mexico South Korea
USA Sri Lanka
Africa/Middle East
Taiwan
Egypt(**) Thailand
Mauritius Vietnam
Nigeria(**)
Pakistan
Deutsche Bank Advisory Day – Saudi Arabia
11 September 2014 U.A.E

Deutsche Bank 15
Global Transaction Banking